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Furloughs and your TSP account

Now that sequestration is upon us, what happens to your TSP account? Will you
still get matching contributions from the government. Answer: Yes! But...

What about the amount of money you are putting into the TSP each
payday? Will furloughs impact that? Again, yes!

Most federal workers participate in the TSP, which many experts
consider to be the best 401(k) plan in the world. It is an important option for
workers under the old CSRS program and an essential investment for the majority of
feds who are under the newer FERS plan, which offers a reduced civil service
annuity but a more generous TSP option. When it was set up, planners estimated
that TSP investments and earnings (along with the generous government match) would
supply anywhere from one-third to one-half of the total income available to FERS
retirees. That's a lot.

So what's the deal with the TSP and furloughs?

Under the worst-case scenario for an extended sequestration, Defense
civilians face up to 22 days of furlough and IRS workers could be furloughed one
day per week for anywhere from five to seven days. Some agencies say they will be
able to avoid furloughs, others are still crunching the numbers and watching the
political game of musical chairs in Washington.

Anybody and everybody who is furloughed, even if for only one day,
takes a 20 percent pay hit for that week. In Defense's Dr. Strangelove plan, that
would mean a significant pay cut for most of this year. Furloughs, when and if
they come, probably wouldn't start until mid-April at the earliest. Agencies must
give employees 30-days' notice, and agencies must negotiate the terms and timing
of
furloughs in some cases with unions that represent both union and nonunion workers
in that bargaining unit.

Even the start date of the sequester is in question. With apologies
to Cinderella, Republicans and Democrats who created sequestration and reset the
March 1 deadline couldn't even agree on when March 1 started. The GOP said it was
12:01 am on March 1, whereas Democrats argued that it technically didn't begin
until the following midnight. The Office of Management and Budget, not
suprisingly, ruled for the White House.

Now to the TSP. Will the Federal Retirement Thrift Investment Board,
the agency that runs the TSP, be subject to furloughs? Short answer, No!

The TSP, like several other federal agencies, is not funded with
appropriated money. It is funded through (very small) administrative fees. So no
furloughs.

What about the contributions that federal agencies make to the
accounts of FERS employees? Those workers get an automatic 1 percent contribution
even if they contribute nothing themselves. They can also get an additional 4
percent matching contribution. So what happens to those contributions if the
participant is furloughed?

According to the board:

"If a TSP participant is furloughed, his or her employing agency will
continue to make the automatic 1% contribution and any matching contributions.
However, the 1% automatic contribution will be based on the actual salary received
(lower due to the furlough), not the participant's regular salary. Likewise, the
agency matching contributions will be based on the participant's actual
contribution to the TSP, not their regular contribution level."

Forrest's girlfriend in Forrest Gump is named Jenny, but most people don't
know her last name. It's Curran, and it's never spoken throughout the entire
movie. The only time her full name is revealed is on the envelopes Forrest used to
mail news from Vietnam. Also, it's a popular trivia question used by wait staff at
the Bubba Gump Shrimp Co.

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